New laws affect legacy lawsuits

Long the bane of oil companies, “legacy” lawsuits brought by landowners who claim damage to their property due to exploration activity were the target of new laws enacted this year, creating new rules that are predicted to have marked effects on what happens when suits are brought.

Plaintiffs and their representatives say the cases are a necessary way to not only redress harms that have been done, but to keep in check an industry with infinite resources that given the chance can run roughshod over individuals.

The oil and gas industry says the ease with which such actions can be brought makes for an unfriendly climate in Louisiana, and that despite some reforms already won that place some regulation on the legacy suits, more are needed.

“Louisiana’s poor legal climate toward the oil and gas industry is causing the state to lose out on substantial conventional drilling opportunities and thousands of well-paying jobs to other states, most notably Texas,” says Chris John, president of the Louisiana Mid-Continent Oil and Gas Association.

He and other oil industry boosters cite in particular a report by the Louisiana State University Center for Energy Studies, released in 2012, which says that 1,200 wells have been lost, along with $6.8 billion in oilfield investments and more than 30,000 jobs. The study correlates increases in the number of legacy lawsuits with the oil industry numbers, although the connection is not clearly spelled out.

John and other oil industry backers stand by the report and say the link is valid.

“No policymaker in Louisiana should tolerate the loss of an estimated 30,000 jobs and more than $10 billion in economic activity for any industry in Louisiana,” John said after the report was initially released. “And that is exactly what is happening in the oil and natural gas industry because of the abusive litigation carried out by a few individuals.”

Oil and gas exploration damage can include chemicals in the soil, inability of plants to grow and the existence of other energy-related trash in an area resulting from their exploration efforts.

Gov. Bobby Jindal signed a bill into law restricting the legacy suits passed during the last legislative session. The law bolsters requirements state courts to halt legacy actions if one of the defendants makes an admission of guilt. If that occurs the defendant oil company may recommend a cleanup plan to the state.

That means a Department of Natural Resources cleanup plan, which would be paid for by the defendant, is seen as the most reasonable solution to the problem, absent a showing to the contrary.

State Rep. Gordon Dove (R-Houma), a proponent of legacy suit restrictions and himself heavily involved in the oilfield industry, had said at the start of the session that plaintiffs wining sometimes get cash windfalls from legacy suits and the environmental problem remains uncorrected.

His view of the requirement that actual cleanup be mandatory if a company admits fault marks a turning point in the state’s environmental protection.

“I really believe this year the oil companies and the landowners came together and compromised, and the end result is the cleanup of the site, with the Department of Natural Resources,” Dove said. “To me this was the biggest environmental legislation in Louisiana, in terms of cleanup. I believe we hit a home run, because the end result was to get things cleaned up. We never took away the landowner’s right to sue, so that everyone doesn’t grab their money and not get it cleaned up.”

Changes in the law also allow defendants who have been dropped from such suits and proven they are not at fault to recover attorney fees.

But attorneys who represent claimants are wary of legislative approaches to the environmental cleanup problem.

John Carmouche, a Baton Rouge attorney who has filed multiple legacy suits over the years, maintains that the suits are essential to Louisiana’s ability to get clean from oilfield waste and other effects of exploration.

“They clean the environment of Louisiana,” Carmouche said last week. “The oil companies are not coming back on their own to clean up the properties. We have contacted them in the past seeking cleanup. We have told them we don’t want to file a lawsuit and gotten no response.”

Carmouche currently represents Cameron, Jefferson and Plaquemines parishes in a legacy suit seeking reparation from multiple oil companies in federal court. A federal judge is weighing the question of whether the action should be brought in the state courts, but a decision has not yet been rendered.

The damage done in Louisiana, Carmouche said, is serious.

“Arsenic, radiation, chromium in soils and drinking water, and then there’s the mater of the coast, the need to restore fresh water where damage has been done,” he said.

Dove noted that while opponents to changes in the law that tighten the rules regarding legacy suits point to Big Oil as an unrepentant environmental culprit, small mom-and-pop exploration companies still exist in Louisiana.

“It’s not just Big Oil that gets sued; it’s also little oil,” Dove said.